EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, made and entered into this 21st day of January,
2000, by and among Accom, Inc. a U.S. company ("Seller" or the "Company," such
terms to be used interchangeably), Accom Virtual Studio Inc., a Delaware
corporation ("Accom Virtual Studio"); Accom Virtual Studio (Germany) GmbH; Elset
Electronic Set GmbH; IMadGINE Video Systems Marketing, B.V., a Dutch company
("Purchaser"); and Purchaser's owner, Orad Hi-Tec Systems Ltd., an Israeli
company with its principal offices located in Kfar Saba, Israel ("Orad").
W I T N E S S E T H:
WHEREAS, Seller and its subsidiaries, are engaged in the business of developing,
marketing and distributing, among other things, digital video products and
computer graphic systems; and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to buy from
Seller (either directly or in part through one of its direct or indirect
wholly-owned subsidiaries made a party hereto), all of its virtual set (referred
to herein as "Elset") business assets and properties, including the intellectual
property rights and assets of each of Seller's German subsidiaries, Accom
Virtual Studio (Germany) GmbH and ELSET Electronic-Set GmbH (all such assets
collectively referred to as the "Elset Activity"); and
WHEREAS, Accom Virtual Studio desires to sell to Purchaser, and Purchaser
desires to buy from Accom Virtual Studio all the shares, that is one share of
nominal value of PLN 69,208.00, which represents the entire share capital of
Accom Poland Sp. z o.o. ("Accom Poland").
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements, and upon the terms and subject to the conditions
hereinafter set forth, the parties do hereby agree as follows:
ARTICLE 1
TERMS OF PURCHASE AND SALE
1.01 Purchase and Sale
On the Closing Date (as defined in Section 1.02), Seller shall sell, convey,
transfer, assign and deliver to Purchaser, and Purchaser shall purchase and
acquire from Seller all of the Elset Activity assets and properties, whether now
owned or hereafter acquired prior to the Closing Date, if the Closing Date is
not the date hereof, whether tangible or intangible, all as set forth in Section
1.01 of the disclosure schedule separately delivered by Seller to Purchaser
pursuant hereto (the "Disclosure Schedule"), free and clear of any Liens except
for Permitted Liens (as those terms are defined in Section 2.09 hereof),
including, without limitation, the following (the foregoing and the following
hereinafter referred to collectively as the "Elset Business Assets"):
(i) All equipment, vehicles, tools, and other tangible property
owned by Seller and related to the Elset Activity;
(ii) All materials, wherever located, including work in process,
supplies and marketing material of every type and description,
used in connection with the conduct of the Elset Activity;
(iii) Any and all intellectual property whether registerable or not,
including, without limitation, all right, title and interest
in and to any and all rights to designs, inventions, works of
authorship, technology, software (including software for older
versions of Seller's virtual set system), know-how (including
know-how in process), materials and tools and every other
intellectual or industrial property used exclusively in
connection with the Elset Activity.
(iv) [Intentionally Reserved];
(v) All of Seller's rights under the Commitments (as defined in
Section 2.18), pertaining to the Elset Business Assets or the
conduct of the Elset Activity, including, but not limited to,
any contracts for the purchase of materials, contracts for
services and supplies, permits, licenses and approvals to
operate the Elset Business Assets and any leases of, and any
options to purchase, real and personal property related
exclusively to the Elset Activity;
(vi) All electronic versions of any sales, marketing and
promotional literature and all books, records, brochures, art
work, awards, files and data, or copies thereof, pertaining
exclusively to the conduct of the Elset Activity, including,
but not limited to data bases concerning customers, customer
leads, the install base and customer sales and support
network, except for personnel records and files, copies of
which will be provided to Purchaser to the extent permitted by
law (collectively, the "Books and Records");
(vii) All documentation (including sales forecasts) relating
exclusively to the ownership of the Elset Business Assets or
the conduct of the Elset Activity;
(viii) All of the Company's agreements with its customers and
suppliers relating to the Elset Activity and the Elset
Business Assets that are as set forth in Section 2.18 to the
Disclosure Schedule; and
(ix) All work related to research and development projects of the
Elset Activity and all employment or work contracts with
employees, including, but not limited to, any and all express
or implied employment agreements and work contracts entered
into between the Company (its subsidiaries, except for Accom
Poland, affiliates, agents or assigns) and such employees.
The Parties agree that the terms "Elset Activity" and/or "Elset Business
Assets" do not include the shares of Accom Poland; Accom Virtual Studio
(Germany) GmbH; or ELSET Electonic-Set GmbH.
Seller undertakes to cause that Accom Virtual Studio sells to Purchaser
all its shares of Accom Poland.
Accom Virtual Studio and Purchaser undertake to enter into, on the Closing
Date (as defined in Section 1.02 below),a conditional agreement for the
purchase of all shares of Accom Poland, substantially in the form of
Exhibit A hereto. The shares of Accom Poland shall be automatically
transferred, under the above mentioned conditional agreement, to
Purchaser, as soon as any of the conditions set forth in Article VII-A.02
of this Agreement is satisfied (pertaining to the obtaining of the
approval of the Polish Office for Protection of Competition and
Consumers).
Accom Virtual Studio undertakes to grant, on Closing Date, to Purchaser's
parent company, Orad, the irrevocable power of attorney (substantially in
the form of Exhibit B hereto) to execute the voting rights for the shares
of Accom Poland from and after the Closing Date. This power of attorney
shall expire upon the first to occur of (i) the termination of this
Agreement, or (ii) the consummation of the sale of the shares of Accom
Poland to Purchaser pursuant to any of the three conditions set forth in
Article VII-A.02 below.
Purchaser shall indemnify Seller, Accom Virtual Studio and Accom Poland
for any and all damages caused by acts of negligence or misconduct by
Purchaser or Orad or by Purchaser's or Orad's executive officers,
directors or employees, suffered by Accom Poland, seller or Seller's other
subsidiaries as a result of the exercise by Purchaser of the rights under
the above-mentioned power of attorney.
Purchaser is acquiring the Elset Business Assets and the shares of Accom
Poland in order to complement its own business line. Moreover, Purchaser
does not intend to make any use at all of any of Seller's trade names,
trademarks, going concern and goodwill associated with the Elset Activity,
which will be abandoned by the Purchaser immediately after the acquisition
contemplated hereunder.
Purchaser undertakes to cause the business name of Accom Poland to be
changed to a name not containing the word "Accom" or confusingly similar
to "Accom," and have the change registered by the Local Court, within 45
days after acquisition of all the shares of Accom Poland.
1.02. The Closing
The closing of the transactions contemplated hereby (the "Closing")
shall take place at the offices of Xxxxxxx Xxxxxxxx & Co., in
Jerusalem, Israel, on January ___________, 2000, or at such other place
and/or date as the parties may mutually agree (the "Closing Date").
At the Closing, the following shall take place:
(1) Purchaser shall pay the Cash Payment to Seller (as that term
is defined in Section 1.03 herein);
(2) Title to the Elset Business Assets shall pass from Seller to
Purchaser;
(3) Purchaser, Seller and a trustee shall execute an Escrow
Agreement as provided in Section 1.03 herein;
(4) Purchaser and Accom Virtual Studio shall enter into the
conditional agreement for the sale of all the shares of Accom
Poland;
(5) Accom Virtual Studio shall grant to Purchaser the irrevocable
power of attorney to execute the voting rights from the shares
of Accom Poland, as mentioned in Section 1.01;
(6) Orad and Seller shall enter into a warrant agreement
substantially in the form of Exhibit C hereto, entitling
Seller to purchase up to 70,423 Ordinary Shares of Orad
pursuant to the terms of the agreement (the "Warrant"); and
(7) Each of the parties shall deliver or cause to be delivered to
the intended recipient any other document or instrument
required to be delivered by or on behalf of such party at or
prior to the Closing, pursuant to and as required by this
Agreement, including, but not limited to those documents and
instruments referenced in Article VI herein.
1.03. Purchase Price, Purchaser Holdback and Payment
The aggregate purchase price to be paid by Purchaser to Seller for the
Elset Business Assets and the shares of Accom Poland (the "Purchase
Price") shall be Four Million United States Dollars (US $4,000,000)
plus the Warrant described in section 1.02(6), above. Payment of the
Purchase Price shall be as follows:
(a) On the Closing Date, Purchaser shall pay Seller the sum of
Three Million Six Hundred Thousand United States Dollars (US
$3,600,000) (the "Cash Payment").
(b) In addition, on the Closing Date, the Purchaser shall deliver
to a trustee banking institution for deposit in an
interest-bearing account pursuant to the Escrow Agreement the
payment of the remainder of the Purchase Price, which amount
shall be Four Hundred Thousand United States Dollars (US$
400,000) to be paid over to Seller on the twelve (12) month
anniversary date of the Closing Date (the "Escrow Amount"), it
being agreed by the parties, however, that the Escrow Amount
to be paid by the Purchaser to the Seller shall be held in
escrow and serve as security for the Seller's indemnification
obligations under Article X and pursuant to the provisions of
the escrow agreement to be entered into between Seller,
Purchaser and an escrow agent on or prior to the Closing Date,
in substantially the form attached hereto as Exhibit D (the
"Escrow Agreement"). The sums held in escrow shall be reduced
by any and all monetary or other claims or Damages incurred
against Purchaser and arising out of any breach of the
Company's representations and warranties in this Agreement.
Other than for Taxes and Accom Poland balance sheet
discrepancies as described in Section 2.05 below, the
Purchaser's recourse against the Seller or its subsidiaries
shall be limited to the Escrow Amount, except in such case in
which the Purchaser shall incur monetary or other damage
claims arising out of or as a result of willful misconduct or
fraud on the part of the Seller, any of its executive officers
(as reflected in its most recent filings with the Securities
and Exchange Commission as of the Closing Date), the
subsidiaries of Seller, or the executive officers or directors
of the Seller's subsidiaries.
The satisfaction of Purchaser's claims, under this Section, by
either (i) the Seller, (ii) its subsidiaries, (iii) any of the
Seller's executive officers or directors or (iv) by any
executive officers or directors, of the Seller's subsidiaries,
shall release all the above-mentioned entities and persons
from Purchaser's claims.
Any disputes between the parties with regard to any of the
foregoing shall be resolved, both substantively and
procedurally, in accordance with the terms and provisions of
the Escrow Agreement and the arbitration provision in section
11.05 hereof.
The Parties to the Agreement agree that the payment of the
Purchase Price for shares of Accom Poland shall be made by
Purchaser directly to Seller and not to Accom Virtual Studio.
(c) In addition, Purchaser shall deliver the fully executed
Warrant to Seller.
(d) Payment of the Purchase Price shall be in US Dollars and shall
be made by wire transfer of immediately available funds to an
account or accounts of Seller at a bank or banks specified by
Seller.
1.04. [Intentionally Reserved]
1.05. Proration of Taxes, Fees and Other Charges
The following items shall be apportioned as of 23:59 (Israel Time) of
the day preceding the Closing Date:
annual or periodic taxes, fees or similar charges imposed by
any governmental authority upon or with respect to the Elset
Business Assets, vacation pay, severance pay, rental, payments
to suppliers and employees and other payments under any of the
Commitments, and any other item customarily apportioned and
Seller or Purchaser, as the case may be, shall deliver to the
other a check for the net amount owing under this Section
1.05. If any such
item cannot accurately be apportioned at the Closing or if it
is incorrectly apportioned at the Closing or subsequent
thereto, such item shall be apportioned or reapportioned, as
the case may be, as soon as practicable after the Closing Date
or the date on which the apportionment error is discovered, as
applicable.
Seller and Accom Poland represent and warrant to Purchaser that, Accom
Poland has duly paid or made provision for the payment of all Taxes (as
hereinafter defined) which are due, will be due, are claimed to be due,
or arose out of events or accrued on or before the Closing Date.
The Purchaser acknowledges that Accom Poland may be entitled to receive
approximately US $10,000 in value added taxes that it has previously
paid to the Polish tax authorities. When such amount is received by
Accom Poland, the Purchaser agrees to promptly pay such amounts to
Seller
If, and to the extent, that Accom Poland is successful in its dispute
with the Polish tax authority and collects the approximately US $25,000
in dispute, the Purchaser shall pay all such amounts recovered to the
employees of Accom Poland (as of immediately prior to the Closing).
Other than as specifically set forth in this Section 1.05 and Section
2.08 (defining Taxes), Purchaser shall have no other obligations with
respect to the aforesaid sums.
1.06 Payment of Taxes and Other Charges
Each party shall pay, at the Closing or, if due thereafter promptly
when due, all of their respective transfer taxes, sales taxes, stamp
taxes, value added tax and any other taxes incurred by it and payable
in connection with the transactions contemplated hereby.
Stamp duty for the purchase of shares of Accom Poland shall be paid by
Purchaser and Accom Virtual Studio in equal parts.
1.07 Instruments of Transfer
On the Closing Date, Seller shall deliver to Purchaser duly executed
instruments of transfer (bills of sale) and assignment of the Elset
Business Assets sufficient to vest in Purchaser the interests in the
Elset Business Assets being conveyed in accordance with the terms of
this Agreement.
As regards the purchase of shares of Accom Poland, Purchaser and Accom
Virtual Studio shall enter, on the Closing Date, into the conditional
share sale agreement as described in Section 1.01. above.
1.08 Assumption
As of the Closing, Purchaser shall assume and thereafter pay, perform
or discharge and, effective as of the Closing, does hereby assume the
following contractual obligations (collectively, the "Assumed
Obligations"):
(a) the business obligations of Seller under the Commitments;
(b) certain of the business obligations of Seller with respect to
the Employees (as defined in Section 8.01) to the extent
provided in Article VIII solely with regard to and to the
extent incurred with respect to the Elset Activity; and
(c) the obligations of Seller referred to in Section 1.08 of the
Disclosure Schedule.
For the avoidance of any doubt, it is hereby clarified that no
financial liabilities of Seller through the date of Closing shall be
assigned to Purchaser hereunder.
Specifically excluded from the obligations being assumed hereunder are
the following:
(i) any and all liabilities of any nature whatsoever for Taxes (as
defined in Section 2.08, and specifically with reference to
any tax obligations arising out of the operations of Accom
Poland) incurred or payable by Seller either before or after
the date hereof but solely with respect to the period prior to
Closing;
(ii) any and all loan obligations of Seller incurred in connection
with the Elset Activity;
(iii) any and all liabilities incurred towards the Seller's
employees, including, but not limited to, sales commissions,
shares, options, warrants, and any other rights to purchase
shares issued to Seller's Employees or any options plans or
share purchase plans relating to Employees in connection
therewith, and
(iv) any and all obligations of Accom Poland, in particular, but
not limited to, the Commitments of Accom Poland,
The Parties to this Agreement agree that, because of the purchase of
shares of Accom Poland by Purchaser from Accom Virtual Studio, nothing
in this Agreement shall be interpreted and construed in a way that
shall or might cause the direct assumption by Purchaser (or direct
transfer by Accom Poland), of obligations (including, but not limited
to, obligations resulting under any agreements concluded by Accom
Poland) and/or assets, of any kind, of Accom Poland, except as a
transferee of all of the shares of Accom Poland.
1.09 [Intentionally Reserved]
1.10 Transfer of Seller's Customer Agreements
On or immediately following the Closing Date, the Seller shall take all
commercially reasonable steps to notify all of its customers of the
transactions contemplated and to assign to the Purchaser all
maintenance agreements with customers under the same terms and
conditions as were in effect prior to such assignment and shall assist
Purchaser in transition issues relating thereto as reasonably requested
by the Purchaser. In addition, on or immediately following the Closing
Date, Seller shall provide adequate notification to all of its Elset
Activity distributors and agents of the transactions contemplated
herein to effect the 15-day termination period of the rights to sell or
distribute any Elset products pursuant to the distribution or agency
agreements. Seller shall hold Purchaser harmless from any claims that
any such distributor or agent may have as a result of the termination
of the rights to sell Elset products following the effectiveness of
such termination, and from any claims for any future commissions
relating to sales that may occur after the 15-day notification period.
On or before the Closing Date, Seller shall have obtained any and all
third party acknowledgments and consents necessary (as well as having
provided the Purchaser with evidence of such acknowledgment and
consent) for consummating the transactions contemplated hereby;
provided, however, that the foregoing does not include the approval
from the Polish Office for Protection of Competition and Consumers
necessary for the purchase of shares of Accom Poland.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
2.01 Organization
Seller is a company duly organized, validly existing and in good
standing under the laws of the State of Delaware, USA, and has all
requisite power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
2.02 Authorization
The Board of Directors of Seller has duly authorized the execution and
delivery of this Agreement and the other agreements, documents and
instruments to be executed and delivered by Seller pursuant hereto and
the consummation by Seller of the transactions contemplated hereby and
thereby.
2.03 Further Action
Except for the approval from the Polish Office for Protection of
Competition and Consumers necessary for the purchase of shares of Accom
Poland, no further
corporate or other proceedings or approvals on the part of Seller are
necessary to authorize this Agreement or the other agreements,
documents and instruments to be executed and delivered by Seller
pursuant hereto or the transactions contemplated hereby or thereby.
2.04 No violation
Except as set forth in Section 2.04 of the Disclosure Schedules,
neither the execution and delivery of this Agreement or the other
agreements, documents and instruments to be executed and delivered by
Seller pursuant hereto nor the consummation by Seller of the
transactions contemplated hereby or thereby: (a) will violate or
conflict with any statute, law, ordinance, rule, regulation, order,
judgment or decree affecting Seller, and/or the Elset Business Assets,
and/or Accom Poland, or (b) will violate or conflict with or constitute
a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or will result in the termination
of, or accelerate the performance required by, or result in the
creation of any lien, security interest, charge or encumbrance upon any
of the Elset Business Assets and/or of the Accom Poland's assets and/or
shares of Accom Poland under, or have any other adverse effect under,
any term or provision of the Certificate of Incorporation or Bylaws of
Seller, its subsidiaries, affiliates, agents or assigns related thereto
or of any contract, commitment, understanding, arrangement, agreement
or restriction of any kind or character to which Seller and/or Accom
Poland is a party or by which the Elset Business Assets are subject.
Except as set forth in Section 2.04 of the Disclosure Schedules and
except for the approval of the Polish Office for Competition and
Consumer Protection needed for the purchase of shares of Accom Poland
by Purchaser from Accom Virtual Studio, no consent, approval,
authorization or action by any governmental agency, instrumentality,
commission, authority, board or body (collectively, a "Governmental
Agency") is required in connection with the execution and delivery by
Seller of this Agreement, the other agreements, documents and
instruments to be executed and delivered by Seller pursuant hereto or
the consummation by Seller of the transactions contemplated hereby or
thereby.
2.05 Financial Statements and Budget of Accom Poland
Seller has previously delivered to Purchaser a balance sheet translated
by an independent accounting firm of Accom Poland as of October 31,
1999 (the "1999 Balance Sheet") and a statement of income for the
10-month period then ended (the "1999 Income Statement" and, together
with the 1999 Balance Sheet, the "Financial Statements"). The Financial
Statements (and the notes thereto) are complete and fairly present the
financial condition and assets and liabilities (whether absolute,
accrued, contingent or otherwise) of Accom Poland as of the date
thereof and the results of operations for the period then ended, in
accordance with Polish accounting standards applied on a consistent
basis.
To the extent that Purchaser's 2000 Q1 audit of Accom Poland reveals
liabilities in excess of those disclosed on the 1999 Balance Sheet,
Purchaser shall be compensated
for such discrepancies from the Escrow Amount in accordance with the
terms of the Escrow Agreement and, if such liabilities shall exceed the
Escrow Amount, then Seller shall indemnify Purchaser for such amount
directly.
2.06 No Undisclosed Liabilities
Except as set forth in Section 2.06 of the Disclosure Schedules or in
the Financial Statements, the Elset Activity and/or Accom Poland does
not have any liabilities or obligations of any nature (whether
absolute, accrued, contingent or otherwise and whether due or to become
due) of a type which would be required to be reflected or reserved
against in a balance sheet in accordance with generally accepted
accounting principles. Except as aforesaid and as set forth in Section
2.06 of the Disclosure Schedule, Seller knows of no basis for the
assertion against the Company or the Elset Activity or Accom Poland of
any liability or obligation not incurred in the ordinary course of
business and consistent with past practice.
2.07 Absence of Certain Changes
(a) Except as and to the extent set forth in Section 2.07 of the
Disclosure Schedules, since October 31, 1999, the Elset
Activity and/or Accom Poland has not:
(i) Suffered any material change in its working capital,
financial condition, assets, liabilities or
operations or, on the best knowledge of Seller,
received information in respect of any customers or
suppliers of the Company or the Elset Activity or of
Accom Poland, that could have a material adverse
affect on the prospects of the Elset Activity or the
Elset Business Assets or Accom Poland, nor has the
Company or the Elset Activity or Accom Poland
experienced any labor difficulty or suffered any
casualty loss (whether or not insured).
(ii) Made any change in its business or operations or in
the manner of conducting its business other than
changes in the ordinary course of business.
(iii) Permitted or allowed any of the Elset Business Assets
or Accom Poland's assets to be mortgaged, pledged or
subjected to any lien, encumbrance, restriction or
charge of any kind except Permitted Liens (as defined
in Section 2.09 hereof).
(iv) Written off or determined to write off as
uncollectible any of its notes or accounts receivable
or any portion thereof, except for immaterial
write-offs in the ordinary course of business,
consistent with past practice.
(v) Canceled any debts or claims, or waived any rights,
of substantial value.
(vi) Sold, transferred or conveyed any of the Elset
Business Assets or Accom Poland's assets, except in
the ordinary course of business and consistent with
past practice.
(vii) Disposed of or permitted to lapse, or, to the best
knowledge of Seller, otherwise failed to preserve,
any Proprietary Rights (as defined in Section 2.13
hereof), disposed of or permitted to lapse any
license, permit or other form of authorization, or
disposed of or disclosed to any person other than
authorized representatives of Purchaser, any trade
secret, formula, process or know-how.
(viii) Granted or promised any increase in the compensation
of any employee involved with the Elset Activity or
the activity of Accom Poland (including, without
limitation, any increase pursuant to any bonus,
pension, profit sharing or other plan or commitments)
or instituted or adopted any new benefit programs,
plans or other arrangements as are customary on a
periodic basis or required by agreement or
understanding.
(ix) Made any pension, retirement, profit sharing, bonus
or other employee welfare or benefit payment to any
Elset Activity employee or Accom Poland's employee,
except for such payment's made in the ordinary course
of business.
(x) Entered into any lease of real or personal property.
(xi) Terminated or amended or suffered the termination or
amendment of, or to the best knowledge of Seller,
failed to perform in all material respects all of its
obligations (including any and all obligations to
customers), or suffered or permitted any material
default to exist, under any contract, lease,
agreement or license.
(xii) Become aware of the intention of any of the employees
or workers of Accom Poland who is engaged in research
and development to terminate his or her employment or
other contractual work relationship.
(xiii) Agreed, whether in writing or otherwise, to take any
action described in this Section 2.07(a).
(b) Except as and to the extent set forth in Section 2.07 of the
Disclosure Schedule, since October 31, 1999, Seller has not
made any capital expenditures, commitments or projections for
additions to property, plant, equipment or intangible capital
assets connected to the Elset Activity or Accom Poland.
2.08 Certain Tax Matters
(a) Seller and Accom Poland have duly filed all Tax Returns (as
hereinafter defined) required to be filed by it in connection
with the Elset Activity and the activity of Accom Poland. All
such Tax Returns are true, correct and complete, and Seller
and Accom Poland have duly paid or made provision for the
payment of all Taxes (as hereinafter defined) which are due,
will be due, or are claimed to be due from it arising from the
Elset Activity or the Elset Business Assets or Accom Poland's
activity by any authority. There are no liens with respect to
Taxes upon any of the Elset Business Assets and Accom Poland's
assets, other than with respect to Taxes not yet due.
(b) For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, excise,
real and personal and intangible property, purchase tax,
municipal tax, value added tax, transfer, license, payroll and
franchise taxes, imposed by the United States (particularly in
the States of Delaware and California), Germany, Poland or any
other foreign government or subdivision or agency thereof; and
such include any interest, penalties or additions to tax
attributable to such assessments. For purposes of this
Agreement the term "Tax Return" shall mean any report, return
or other information required to be supplied to a taxing
authority in connection with Taxes.
2.09 Title to Properties: Encumbrances.
Seller, through its direct or indirect wholly-owned subsidiaries
(including Accom Poland), has the sole, valid and marketable title to
all of the Elset Business Assets and Accom Poland's assets, free and
clear of any and all Liens except Permitted Liens (as those terms are
hereinafter defined), other than Liens set forth in Section 2.09(a) of
the Disclosure Schedule which shall be released or removed as of the
Closing Date. Upon consummation of the purchase of the Elset Business
Assets contemplated hereby, Seller will deliver to the Purchaser good,
valid and marketable title to all of such Elset Business Assets, free
and clear of any and all Liens except Permitted Liens. The term "Liens"
shall mean any mortgage, pledge, lien, security interest, conditional
sale agreement, easement, leasehold, interest, license, restriction,
charge, claim, liability for payment or other encumbrance or commitment
or obligation of any kind (whether absolute, accrued, contingent or
otherwise). The term "Permitted Liens" shall mean (a) liens as set
forth in Section 2.09(b) of the Disclosure Schedule, and (b) minor
imperfections of title and encumbrances, if any, which are not
substantial in amount, do not materially detract from the value of the
property subject thereto and do not impair the use of the Elset
Business Assets or the business and operations of the Elset Activity or
Accom Poland.
2.10 Millennium Compliance.
All of the Seller's Elset Business Assets, and the assets owned or
operated by Accom Poland and products currently under development, will
record, store, process and calculate and present calendar dates falling
on and after January 1, 2000, and will calculate any information
dependent on or relating to such dates, in the same manner
and with the same functionality, data integrity and performance as the
products record, store, process, calculate and present calendar dates
on or before December 31, 1999, or calculate any information dependent
on or relating to such dates (collectively "Year 2000 Compliant"). The
Elset Business Assets and the assets of Accom Poland will lose no
functionality with respect to the introduction of records containing
dates falling on or after January 1, 2000. All of the Elset Activity's
internal computer systems and Accom Poland's internal computer systems,
including without limitation, its accounting systems, are Year 2000
Compliant. Seller has not given to third parties, including to its
customers and distributors, any representations regarding Year 2000
Compliance that are not true and correct.
2.11 Equipment and Fixed Assets
Seller has used the equipment and fixed assets being sold to Purchaser
hereunder in its operation of the Elset Business and such equipment and
fixed assets currently are in good operating condition sufficient for
use in the Elset Business. Seller is not aware of any significant
problems with such equipment and fixed assets. Except as set forth
above, all equipment and fixed assets of the Elset Business being sold
to Purchaser hereunder are being sold on an "As Is, Where Is" basis,
and Seller makes no other representations regarding the quality,
usability or salability of such items.
2.12 Leases
Section 2.12 of the Disclosure Schedule contains an accurate and
complete list of each lease and all amendments and modifications
thereof (the "Leases") pursuant to which the Seller or Accom Poland
leases for the Elset Activity or other activity of Accom Poland real or
personal property. True and accurate copies of all Leases have been
previously delivered to Purchaser. To the best knowledge of Seller,
there exists no material event of default with respect to any of the
Leases by any party thereto, nor any event which with notice or lapse
of time or both would constitute a material event of default
thereunder. All such Leases are, and notwithstanding any assignment
thereof to Purchaser will be, valid, binding and enforceable in
accordance with their respective terms and in full force and effect,
subject to obtaining any requisite consents of third parties as
specified in Section 2.12 of the Disclosure Schedule.
2.13 Proprietary Rights; Computer Programs, Databases and Software
(i) Section 2.13 of the Disclosure Schedule contains a complete
list and an accurate description of patents, patent
applications, copyrights and copyright registrations (if such
property rights exist), and all applications therefore,
inventions, trade secrets, confidential processes and
formulae, and all other similar rights presently owned or held
by the Elset Activity and /or by Accom Poland or with respect
to which Seller and/or Accom Poland own(s) or hold(s) any
license or other direct or indirect interest (collectively,
the "Proprietary Rights") in relation to the Elset Activity or
activity of Accom Poland; and no other Proprietary Rights are
used in or, to the best knowledge of Seller, are necessary for
the conduct of the Elset Activity and/or the activity of Accom
Poland as presently conducted, other than as set forth in
Section 1.01(c) of the
Disclosure Schedule. To the best knowledge of Seller, no
Proprietary Rights or know-how and in process know-how used by
the Elset Activity and/or Accom Poland, and no services or
products sold by the Elset Activity and/or Accom Poland,
conflict with or infringe any similar rights ("Third Party
Proprietary Rights") or services or products of any other
person. Except as set forth in Section 2.13 of the Disclosure
Schedule, no claims have been asserted by any person with
respect to the ownership, validity, license or use of the
Proprietary Rights or the production, provision or sale of any
services or products by the Elset Activity and/or by Accom
Poland, and, to the best knowledge of Seller, there is no
basis for any such claim and Seller knows of no intention to
file such claim. In addition, with respect to Proprietary
Rights, Seller has not initiated any claims related thereto;
no claims or notices of claims relating to Third Party
Proprietary Rights have been received by either Seller or
Accom Poland; and neither Seller nor Accom Poland has received
any indication, whether verbally or in writing, that such
claims may be asserted against Seller or Accom Poland in the
future. Seller and/or Accom Poland has(ve) taken all
reasonable measures to maintain and protect the Proprietary
Rights. Seller has, and upon consummation of the sale of the
Elset Business Assets contemplated hereby, will deliver to the
Purchaser, the right to produce, provide and sell the services
and products produced, provided and sold by the Elset
Activity, and to conduct its business as heretofore conducted,
and the consummation of the transactions contemplated hereby
will not alter or impair such rights. The instruments of
assignment to be delivered by Seller to Purchaser at the
Closing pursuant to which Seller will assign all such
Proprietary Rights will be duly executed and, if required to
be filed, will be in form suitable for filing.
(b) Section 2.13(a) of the Disclosure Schedule accurately
identifies all computer programs, databases and software
owned, sold, licensed, leased or otherwise used in connection
with the Elset Activity or the activity of Accom Poland ,
whether purchased or internally developed. Other than as set
forth in Section 1.01(c) and Section 2.13(b) of the Disclosure
Schedules, Seller has, and is assigning to Purchaser as part
of the Elset Business Assets, computer programs, databases and
software (including codes) which are sufficient and adequate
to operate the Elset Activity. Seller has, and is assigning to
Purchaser as part of the Elset Business Assets, documentation
in reasonable detail relating to all such scheduled computer
programs, databases and software (including codes) being
assigned to Purchaser as part of the Elset Business Assets.
Except as set forth in the Disclosure Schedule, all such
scheduled computer programs, databases and software and the
source codes thereof have been maintained only at Seller's
offices. Section 2.13 of the Disclosure Schedule identifies
each person to whom Seller has, since January 1, 1996 sold,
licensed, leased or otherwise transferred or granted any
interest or rights to any of its computer programs, databases
or software used in connection with the Elset Activity or
activity of Accom Poland and the date of each such sale,
license, lease or other transfer or grant. Seller has
previously delivered to Purchaser complete and accurate copies
of all documents relating to each such sale, license, lease or
other transfer or grant.
2.14 Litigation
Section 2.14 of the Disclosure Schedule sets forth a complete list and
an accurate description of all claims, actions suits, proceedings and
investigations pending and, to the best knowledge of Seller, threatened
by or against Seller. Except as set forth in Section 2.14 of the
Disclosure Schedule, no such pending or threatened claims, actions,
suits, proceedings or investigations, if adversely determined, would
individually or in the aggregate materially adversely affect the
business, financial condition, results of operations or prospects of
the Elset Activity or Accom Poland or the transactions contemplated
hereby. Seller knows of no valid basis for any such claim, action,
suit, proceeding or investigation and no such claim, action, suit,
proceeding or investigation has been pending during the three year
period preceding the date of this Agreement.
2.15 Insurance
Section 2.15 of the Disclosure Schedule sets forth a complete and
accurate list of all policies (including their respective expiration
dates) of fire, liability, product liability, health, title and other
forms of insurance presently in effect with respect to the Elset
Activity or Accom Poland. To the best knowledge of Seller, all such
policies are valid, outstanding and enforceable and provide insurance
coverage for the properties, assets and operations of the Elset
Activity or Accom Poland of the kinds, in the amounts and against risks
customarily maintained by organizations similarly situated and upon
Closing, Seller shall deliver and assign to Purchaser (to the extent
assignable) such policies (with consent of the respective insurance
companies, to the extent required), or, at the Purchaser's request,
shall cause the termination of those policies identified by the
Purchaser in such request, which termination shall come into effect no
earlier than 30 days after the Date of Closing. Except as set forth in
Section 2.15 of the Disclosure Schedule, Seller has not designated any
risk as being self-insured or set aside any amount of reserve to cover
such risk.
2.16 Employee Benefit Plans
Section 2.16 of the Disclosure Schedule contains an accurate list of
each of the Elset Activity Employee's and the employees of Accom
Poland's benefit plans or other deferred compensation, incentive
compensation, stock purchase, stock option, pension, profit sharing or
retirement plan, arrangement, and each other employee benefit plan or
arrangement, whether formal or informal, and whether legally binding or
not, maintained or contributed to by the Seller and/or Accom Poland
covering the Elset-Activity's employees and/or Accom Poland's employees
(collectively, the "Employee Benefit Plans"). Sections 2.16 of the
Disclosure Schedule sets forth the annual amount accrued or payable
(including for final salaries, severance, commissions, accrued but
unpaid vacation days and so forth) for the fiscal year ended December
31, 1999 under the Employee Benefit Plans, which amounts shall be paid
in their entirety by Seller. Neither Seller nor Accom Poland has any
formal plans or commitments, whether legally binding or not, to create
any additional plan, agreement
or arrangement or modify or change any existing Employee Benefit Plan
that would affect any of the Elset Activity's employees and/or Accom
Poland's employees.
2.17 Bank and Safe Deposit Boxes
Section 2.17 of the Disclosure Schedule contains a correct and complete
list of each bank account and safe deposit box maintained by the Elset
Activity which will be transferred to the Purchaser and the names of
all persons authorized to deal with such accounts and safe deposit
boxes.
2.18 Contracts and Commitments
Section 2.18 of the Disclosure Schedule contains a list of each
contract, agreement of understanding whether written or oral (including
any amendments thereto) that relate to Accom Poland and/or the Elset
Activity and to which Accom Poland and/or the Company or the Elset
Activity is(are) (a) party(ies) or to which either of them may be
subject (collectively, the "Commitments").
(a) Except as set forth in Section 2.18 of the Disclosure Schedule:
(i) Neither Seller nor Accom Poland is a party to any
contract, commitment, arrangement or understanding,
including, without limitation, any written or verbal
price concession agreement, and which is not
cancelable without penalty or premium by the Seller
or its successors on 90 days notice or less;
(ii) Subject to obtaining any requisite consents of third
parties as specified in Section 2.26 hereof, the
legal enforceability of the contracts, commitments,
arrangements and understandings referred to in
Section 2.18(a)(i) hereof after the Closing will not
be affected in any manner by the execution and
delivery of this Agreement or the consummation of the
transactions contemplated hereby;
(iii) There are no outstanding contracts or commitments,
which at the time of their execution, were projected
to result in a gross margin contribution of less than
35% to the Seller's Elset Activity or the activity of
Accom Poland;
(iv) Neither Seller nor Accom Poland is involved or bound
by (with regard to the Elset Activity) (A) any
outstanding contracts with officers, employees,
agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that are not
cancelable by the Company and/or Accom Poland on
notice of no longer than 90 days and without
liability, penalty or premium or (B) any agreements
that contain any severance or termination pay,
liabilities or obligations;
(v) Neither Seller nor Accom Poland has given any power
of attorney (whether revocable or irrevocable) to any
person, firm or corporation for any purpose
whatsoever with regard to the Elset Activity; and
(vi) Neither Seller nor Accom Poland is in default, and,
to the best knowledge of Seller, there is no basis
for any valid claim of default, in any material
respect, under any of its contracts, commitments,
arrangements or understandings.
(b) True and correct copies of all contracts, commitments,
arrangements and understandings, and true and correct
descriptions of any verbal contracts, commitments,
arrangements or understandings, set forth in Section 2.18 of
the Disclosure Schedule have heretofore been delivered by
Seller to Purchaser.
2.19 Customers and Suppliers
Section 2.19 of the Disclosure Schedule contains an accurate and
complete list of the names and addresses of all of the customers of the
Seller relating to the Elset Activity and the suppliers to the Seller
that relate to the Elset Activity, in terms of purchased supplies,
equipment or services during the twelve months preceding December 31,
1999 as well as the names and addresses of all of the customers and
suppliers of Accom Poland, in terms of purchased supplies, equipment or
services during the twelve months preceding December 31, 1999. Except
as set forth in Section 2.19 of the Disclosure Schedule, during the
aforesaid twelve month period neither the Seller nor Accom Poland has
been notified by any customer of any material defect and
dissatisfaction with a purchased system, which customer subsequently
requested return of a system to Seller and/or Accom Poland under
Seller's and/or Accom Poland's warranty.
2.20 Personnel
Section 2.20 of the Disclosure Schedule sets forth the names, ages and
titles of all Accom Poland's employees and employees related to the
Elset Activity and the accrued vacation time of each such employee as
of the most recent practicable date. The employment terms of such
employees are as set forth in the employment agreements previously
provided by Seller to Purchaser. Seller is not in default with respect
to any of its obligations to its employees that relate to the Elset
Activity and Accom Poland is not in default with respect to any of its
obligations that relate to Accom Poland's employees.
2.21 Labor Relations
Except as and to the extent set forth in Section 2.21 of the Disclosure
Schedule: (a) no collective bargaining agreement currently covers (nor
has any, in the past covered) Accom Poland's employees and/or any
employees of the Company that relate to the Elset Activity, nor is any
currently being negotiated by Seller and/or Accom Poland and, to the
best knowledge of Seller, no attempt to organize any group or all of
the Accom Poland's employees and/or the employees of the Company that
relate to the
Elset Activity has been made or proposed; (b) there is no labor strike,
dispute, slowdown or stoppage actually pending or, to the best
knowledge of Seller, threatened against or involving the Elset Activity
and/or Accom Poland; (c) to the best knowledge of Seller, each of the
Company and Accom Poland Sp. z o.o. is in compliance with all laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours for Accom Poland's employees and those
employees relating to the Elset Activity; (d) Seller has not received
notice of the intent of any governmental agency responsible for the
enforcement of labor or employment laws to conduct an investigation of
or relating to the Elset Activity or Accom Poland and, to the best
knowledge of Seller, no such investigation is in progress; (e) no
private agreement restricts the Company from relocating, closing or
terminating any of its Elset Activity operations or facilities or Accom
Poland's operations or facilities; and (f) the Elset Activity and Accom
Poland's activity have not in the past five years experienced any work
stoppage or other labor difficulty or committed any unfair labor
practice.
2.22 Environmental Protection
Except as set forth in Section 2.22 of the Disclosure Schedule, to the
best knowledge of Seller, Seller and Accom Poland have obtained all
permits, licenses and other authorizations which are required with
respect to the operation of Accom Poland and/or operations of the Elset
Activity under all applicable laws relating to pollution or protection
of the environment (the "Environmental Laws").
2.23 No Breach
Except as set forth in Section 2.23 of the Disclosure Schedule, each
arrangement (whether evidenced by a written document or otherwise and
of whatever type) referred to in this Agreement and listed in the
Disclosure Schedule, under which Seller has any right, interest or
obligation relating to the Elset Activity, is, except as specifically
indicated herein or in the Disclosure Schedule describing such
arrangement, in full force and effect in all material respects; except
as set forth in Section 2.23 of the Disclosure Schedule, there are not
outstanding disputes thereunder or, to the best knowledge of Seller,
threatened cancellations thereof and Seller has not breached any
provision of, nor does there exist any default in any material respect
of, or event (including the execution and delivery of this Agreement
and the other agreements, documents and instruments to be executed and
delivered by Seller pursuant hereto and the consummation of the
transactions contemplated hereby and thereby) which with the giving of
notice or the passage of time or both would become a breach or default
in any material respect of, the terms of any such arrangement.
2.24 Compliance with Applicable Law
Except as set forth in Section 2.24 of the Disclosure Schedule, the
Company and Accom Poland have, to the best knowledge of Seller, for at
least the last three years duly complied, and is presently duly
complying, in all material respects, with respect to the operations,
equipment and all other property, leases, practices and all other
aspects of the Elset Activity or activity of Accom Poland, with all
applicable laws
(whether statutory or otherwise), rules, regulations, orders
ordinances, judgment or decrees of all relevant governmental
authorities.
2.25 Assets Necessary to the Elset Activity and activity of Accom Poland
Except as set forth in Section 2.25 of the Disclosure Schedule, Seller
and Accom Poland have good, valid and marketable title to all
properties and assets, real, personal and mixed, tangible and
intangible, is a party to all leases, licenses and other agreements,
and holds all authorizations, permits and approvals of all applicable
Governmental Agencies and other third parties, to the best knowledge of
Seller reasonably necessary to permit it and, after the Closing,
Purchaser to carry on the Elset Activity and activity of Accom Poland
as presently conducted, and the Elset Business Assets include all
properties and assets, real, personal and mixed, tangible and
intangible, all leases contracts and other agreements, and all
authorizations, permits and approvals currently used by or useful to
the Seller in the operation of the Elset Activity.
2.26 Consents
A list and description of all consents, approvals, authorizations or
orders of any Governmental Agency or other third parties necessary for
the authorization, execution and delivery by Seller of this Agreement
and the other agreements, documents and instruments to be executed and
delivered by Seller pursuant hereto and the consummation of the
transactions contemplated hereby and thereby, including, without
limitation, the sale, conveyance, assignment, transfer and delivery of
the Elset Business Assets and the shares of Accom Poland to Purchaser,
is set forth in Section 2.26 of the Disclosure Schedule.
2.27 Disclosure
No representation or warranty to Purchaser contained in this Agreement,
and no statement contained in the Disclosure Schedule or any
certificate, document or instrument delivered by Seller to Purchaser at
Closing pursuant hereto to the best knowledge of Seller contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein
complete and not misleading.
2.28 Accom Poland
Accom Poland has been properly registered and validly exists under the
laws of Poland, and subject to the disclosures set forth in Section
2.28 of the Disclosure Schedule, may carry on its business in Poland
and own and possess property. In addition, Seller represents that:
1) Accom Poland has been registered in the Commercial Register with
the District Court in Szczecin, Business Division, under number
RHB 4841;
2) The share capital of Accom Poland consists of 1 (one) share and
amounts to PLN 69,208.00 (sixty nine thousand two hundred and
eight zloties);
3) The only one share in Accom Poland's share capital has been fully
paid up and is owned directly by Accom Virtual Studio Inc. with
its registered office in Delaware (USA);
4) The only share of Accom Poland is free of any charges,
encumbrances, or other rights of third parties. Accom Poland is
not under a duty to issue any new shares;
5) Accom Poland's Articles of Association dated 28 November 1995
(with 5 January 1996 amendment) are currently binding;
6) Accom Poland is not an owner or perpetual usufructuary of real
estate;
7) No liquidation, composition or similar proceedings have been
commenced against Accom Poland;
8) There is no pending claim, action, investigation or proceeding of
any kind against Accom Poland or in which Accom Poland is a party,
with an exception of tax proceedings (VAT);
9) Neither the conclusion of this Agreement nor the performance
hereof violates the Articles of Association of Accom Poland,
causes the loss of any of Accom Poland's significant rights or
results in any encumbrance or charge on Accom Poland assets;
provided, that all taxes due on the transaction are paid on time
and all notifications are filed as required by law; and
10) Upon consummation of the conditional contract for the purchase of
all shares of Accom Poland, the Purchaser will acquire an
unfettered right to the good and valid title to all shares of
Accom Poland, free and clear of all liens, charges, encumbrances,
preemptive rights and other claims and, upon delivery of the
shares of Accom Poland, Purchaser will acquire such good and valid
title to all shares of Accom Poland, free and clear of all liens,
charges, encumbrances, preemptive rights and other claims.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND ORAD
Each of Purchaser and Orad hereby represents and warrants to Seller as
follows:
3.01 Organization
Purchaser is a company duly organized, validly existing and in good
standing under the laws of The Netherlands, and has all requisite power
and authority to carry on its business as it is now being conducted,
and to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby. Orad is a company duly organized,
validly existing and in good standing under the laws of the
State of Israel, and has all requisite power and authority to carry on
its business as it is now being conducted, and to execute, deliver and
perform this Agreement and to consummate the transactions contemplated
hereby.
3.02 Corporate Power and Authority: Effect of Agreement
The execution, delivery and performance by Purchaser and Orad of this
Agreement and the consummation by Purchaser and Orad of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Purchaser and Orad. This
Agreement, together with all the Exhibits hereto, has been duly and
validly executed and delivered by Purchaser and Orad and constitutes
the valid and binding obligation of Purchaser and Orad, enforceable in
accordance with its terms, except to the extent that such
enforceability (i) may be limited by bankruptcy, insolvency or other
similar laws relating to creditors' rights generally, and (ii) is
subject to general principles of equity. The execution, delivery and
performance by Purchaser and Orad of this Agreement, together with all
the Exhibits hereto, and the consummation by Purchaser and Orad of the
transactions contemplated hereby will not, with or without the giving
of notice or the lapse of time, or both, subject to obtaining any
required consents, approvals, authorizations or exemptions, (i) violate
any provision of law, rule or regulation to which Purchaser or Orad is
subject, (ii) violate any order, judgment or decree applicable to
Purchaser or Orad or (iii) conflict with, or result in a breach or
default under, any term or condition of the Memorandum and/or Articles
of Association of Purchaser or Orad, or any agreement or other
instrument to which Purchaser or Orad is a party or by which either or
them may bound; except, in each case, for violations, conflicts,
breaches or defaults which in the aggregate would not materially hinder
or impair the consummation of the transactions contemplated hereby.
3.03 Consents
Except for the approval of the Polish Office for Protection of
Competition and Consumers necessary for the acquisition of the shares
of Accom Poland, no consent, approval or authorization of, or exemption
by, or filing with, any governmental or regulatory authority is
required in connection with the execution, delivery and performance by
Purchaser or Orad of this Agreement or the taking of any other action
contemplated hereby, excluding, however, consents, approvals,
authorizations, exemptions, waivers and filings, if any, which Seller
is required to obtain or make.
3.04 Availability of Funds
Purchaser has available and will have available on the Closing Date
sufficient funds to enable it to consummate the transactions
contemplated by this Agreement.
3.05 Capitalization
The authorized capital stock of Orad consists of the following: a total
of 20,000,000 authorized Ordinary Shares (NIS 0.01 par value) of which
9,843,445 shares are issued
and outstanding. Except for 418,291 Ordinary Shares reserved for
issuance under Orad's employee stock option plans, under which options
to purchase all such shares are outstanding, and except for a warrant
issued to Intel Atlantic Inc. to purchase 171,720 Ordinary Shares of
Orad, there are no options, warrants, conversion privileges or other
agreements or rights presently outstanding to purchase any securities
of Orad. There are no rights of first refusal or other rights to
purchase with respect to any outstanding shares of Orad's capital stock
or other securities, or any shares of capital stock issuable upon
exercise, conversion or exchange thereof, pursuant to any agreement or
commitment of Orad.
ARTICLE IV
COVENANTS OF SELLER
Seller hereby covenants and agrees with Purchaser as follows:
4.01 Cooperation and Assignments
Seller will use commercially reasonable efforts, and will cooperate
with Purchaser, to secure for itself and on behalf of Accom Poland all
necessary consents, approvals, authorizations, exemptions (including
those from any required governmental bodies) and waivers from employees
and third parties as are set forth in Section 2.26 of the Disclosure
Schedule or as shall otherwise be required in order to enable Seller to
effect the transactions contemplated hereby and will use its
commercially reasonable efforts to cause the consummation of such
transactions with the terms and conditions hereof.
Notwithstanding anything herein to the contrary, to the extent the
assignment of any right to be assigned to Purchaser pursuant to the
provisions hereof shall require the consent of any other party, this
Agreement shall not constitute a breach thereof or create rights in
others not desired by Purchaser. If any such consent is not obtained,
Seller shall cooperate with Purchaser in any commercially reasonable
arrangement designed to provide for Purchaser the benefit of any such
right, including enforcement of any and all rights of Seller against
the other party to any contract arising out of the breach or
cancellation thereof by such party or otherwise.
4.02 Conduct of Business
Except as may be otherwise contemplated by this Agreement or required
by any of the documents listed in Section 4.02 of the Disclosure
Schedule or except as Purchaser may otherwise consent to in writing
between the date hereof and the Closing Date, Seller and Accom Poland
shall:
(i) in all material respects, operate their businesses only in the
ordinary course;
(ii) maintain the Elset Activity's and Accom Poland's fixed assets
and other equipment as a whole in good operating condition and
repair sufficient to
enable Purchaser to operate it in all the manners in which it
was operated immediately prior to the date hereof, except for
maintenance required by reason of fire, flood or other acts of
G-d;
(iii) continue all material existing policies of insurance (or
comparable insurance) of or relating to the Elset Activity and
to Accom Poland in full force and effect; and
(iv) use commercially reasonable efforts to preserve its
relationships with the Elset Activity's and Accom Poland's
suppliers, customers, licensors and licensees and others
having material business dealings with it such that its
business will not be substantially impaired.
4.03 Access
Between the date hereof and the Closing (if the Closing Date is not the
date hereof), Seller for itself and on behalf of Accom Poland shall
provide Purchaser with such information as Purchaser may from time to
time reasonably request with respect to the Elset Activity and the
activity of Accom Poland and the transactions contemplated by this
Agreement. Any disclosure whatsoever during such investigation by
Purchaser shall not constitute an enlargement of or additional
warranties or representations of Seller beyond specifically set forth
in this Agreement.
4.04 Right of Endorsement
From and after the Closing Date, Purchaser shall have the right and
authority to endorse, without recourse, the name of Seller or on any
check or any other evidence of indebtedness received by Purchaser and
to which it is entitled on account of any receivable or other asset
transferred by Seller pursuant hereto, and Seller shall deliver to
Purchaser at the Closing, documents sufficient to permit Purchaser to
deposit such checks or other evidences of indebtedness in bank accounts
in the name of Purchaser.
4.05 Post-Closing Payments
Seller shall remit in cash to Purchaser, promptly at the receipt of the
cash, the proceeds of all checks and other payments for products sold
or services provided by Purchaser following the Closing Date coming
into the possession of Seller. Purchaser shall remit in cash to Seller,
promptly at the receipt of the cash, the proceeds of all checks and
other payments for products sold or services provided by Seller on or
prior to the Closing Date coming into the possession of Purchaser.
4.06 Agreement with Employees
Seller shall use commercially reasonable efforts to enable the
Purchaser to assume and continue the employment agreements with
Seller's employees listed in Section 4.06 of the Disclosure Schedules.
Seller shall also use reasonable efforts to cause that the employment
agreements concluded by Accom Poland shall continue after the purchase
of shares of Accom Poland by Purchaser.
4.07 Transfer of Seller's Customer Agreements; Termination of Agents and
Distributors
Seller shall cause, complete and effect the Assignment of the
agreements between the Seller and its customers (those agreements with
such customers as are set forth in Section 2.19 of the Disclosure
Schedule), all of such agreements to be assigned to Purchaser under the
same terms and conditions as were in effect prior to the Assignment.
Furthermore, and except as otherwise agreed in writing between the
parties, effective as of the Closing Date, Seller shall give a 15-day
notice of termination of all agreements with and obligations with
respect to sales agents and distributors relating to the Elset
Activity. In addition, for a period of two years from the date hereof,
the Seller's management will assist Purchaser, as may be reasonably
requested from time to time by Purchaser, to maintain relations with
the Elset Activity's customers to be assigned to Purchaser and, to the
extent it may do so and is necessary, shall assign such customer
agreements to Purchaser.
4.08 [Intentionally Reserved]
4.09 Non-Competition
(i) During the period from and after the Closing Date until three
(3) years thereafter, neither the Seller, the Seller's
subsidiaries (specifically including those corporate entities
that are signatories hereto), Xx. Xxxxxx Xxxxxx, nor Xx.
Xxxxxx Xxxxx shall, directly or indirectly, engage in a
business or enterprise (either as a proprietor, partner, joint
venturer, agent, consultant, or controlling stockholder) in
the development, manufacture or marketing of any Competing
Products (as defined below) and during such period shall not
solicit or attempt to solicit sales or licenses of any
Competing Products, interfere with, disrupt or attempt to
disrupt the relationship, contractual or otherwise, between
Purchaser and its customers, suppliers, agents, consultants,
officers or employees relating to the Elset Business Assets or
activity of Accom Poland, as currently conducted on the date
hereof.
(ii) The phrase "Competing Products" as used herein means any and
all virtual-set products currently developed, manufactured or
marketed by the Seller or any other virtual set, including the
virtual set-related graphics and on-air graphics packages
relating thereto.
(iii) For so long as the Purchaser shall remain the owner of the
Elset Business Assets and the owner of Accom Poland, Seller
agrees not to use the "Elset" tradename, trademark or
servicemark, as applicable, with respect to any of the
Seller's products or any of the Seller's communications with
customers, except
as may specifically be agreed to in writing by the Purchaser
or to explain to such persons the sale of the business to the
Purchaser.
(iv) It is the desire and intent of the parties that the provisions
of this Section 4.09 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought.
(v) If any particular provisions or portion of this Section 4.09
shall be adjudicated to be invalid or unenforceable, this
paragraph shall be deemed amended to delete therefrom such
provision or portion thereof adjudicated to be invalid or
unenforceable, such amendment to apply only with respect to
the operation of this paragraph in the particular jurisdiction
in which such adjudication is made.
(vi) If there is a breach or threatened breach of the provisions of
this Section 4.09, Purchaser shall be entitled to seek an
injunction restraining Seller from such breach without the
necessity of proof of special damages. Nothing herein shall be
construed as prohibiting Purchaser from pursuing any other
remedies for such breach or threatened breach.
4.10 Publicity
Each party agrees that no publicity release or announcement concerning
the transactions contemplated hereby shall be issued without the
advance approval of the form and substance thereof by the other party
hereto, except as may be required by law.
4.11 Confidentiality
At all times after the Closing Date, Seller shall retain in strictest
confidence, and shall not use for its benefit or for the benefit of
others, all confidential information comprising or related to the Elset
Business Assets and Accom Poland, including, without limitation,
technology, know-how, trade secrets, customer lists transferred hereby
to Purchaser, principal policies, marketing plans or strategies,
product development techniques or plans, or technical processes,
designs and design projects respecting the Elset Business Assets and
Accom Poland.
In addition, Seller and Purchaser have entered into a Non-Disclosure
and No-Hire Agreement, dated as of December 9, 1999, and attached
hereto as Exhibit E. That agreement shall remain in full force and
effect and all other parties signatories hereto shall, to the extent
applicable, agree to abide by its terms and conditions.
4.12 Further Assurance
At any time or from time to time after the Closing Date, Seller shall,
at the request of Purchaser, execute and deliver any further
instruments or documents and take all such further action as Purchaser
may reasonably request in order to transfer to and vest in Purchaser
all of Seller's right, title and interest in and to all of the Elset
Business Assets and the shares of Accom Poland (following the transfer
of such shares).
4.13 Transition Assistance
Following the date of the Closing, Seller and Xx. Xxxxxx Xxxxxx agree
(i) to forward to the Purchaser all current and future leads for
virtual studio sales and customers, and (ii) to participate in or
facilitate introductory meetings for the current install base as of the
Closing, as reasonably requested by the Purchaser.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser hereby covenants and agrees with Seller as follows:
5.01 Cooperation and Assumption
Purchaser and Orad will use their best efforts, and will cooperate with
Seller, to secure all necessary consents, approvals, authorizations,
exemptions and waivers from third parties as shall be required in order
to enable Purchaser and Orad to effect the transactions contemplated
hereby, and will otherwise use their respective best efforts to cause
the consummation of such transactions in accordance with the terms and
conditions hereof.
5.02 Further Assurances
At any time after the Closing Date, Purchaser shall, at the request of
Seller, and as consented to by Purchaser, execute and deliver any such
further instruments or documents and take all such further action as
Seller may reasonably request in order to release, discharge and hold
harmless Seller and its subsidiaries from any and all liabilities or
obligations arising out of or in connection with any of the Assumed
Obligations.
ARTICLE VI
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to purchase the Elset Business Assets and
assume the Assumed Obligations (as defined in Section 1.08 above) as
well as to enter into the conditional agreement for the purchase of
shares of Accom Poland shall be subject to the satisfaction on or prior
to the Closing Date of all of the following conditions:
6.01 Representations, Warranties and Covenants of Seller
Seller and its subsidiaries shall have complied in all material
respects with all of its agreements and covenants contained herein to
be performed at or prior to the Closing Date, and all the
representations and warranties of Seller and its subsidiaries contained
herein shall be true in all material respects on and as of the Closing
Date with the same effect as though made on and as of the Closing Date,
except as otherwise
contemplated hereby, and except to the extent that such representations
and warranties were made as of a specified date, and except to the
extent that any failure of such representations and warranties to be
true as aforesaid when taken in the aggregate would not materially and
adversely affect the business, value or financial condition of the
Elset Business Assets and/or Accom Poland.
6.02 No Prohibition
No statute, rule or regulation or order of any court or administrative
agency shall be in effect which restrains or prohibits Purchaser from
consummating the transactions contemplated hereby.
6.03 Performance
Seller and its subsidiaries shall have performed and complied, in all
material respects, with all agreements, covenants, obligations and
conditions required by this Agreement to be so performed or complied
with by Seller prior to or at the Closing.
6.04 Officers' Certificates
Seller shall have delivered to Purchaser a certificate, dated the
Closing Date and executed by its President, Vice President or other
duly authorized officer of the Company, certifying as to the
fulfillment of the conditions set forth in Sections 6.01, 6.02 and 6.03
and 6.13.
6.05 Opinion of Counsel to Seller
Purchaser shall have received an opinion of Xxxxxx, Xxxx & Xxxxxxxx
LLP, United States counsel to Seller, an opinion of Xxx. Xxxxxx
Xxxxxxx, Partner of Ernst & Young LLP, Polish counsel to Seller, and an
opinion of Lovells, Boesebeck, Droste, German counsel to Seller each
dated the Closing Date, in the form of Exhibit F annexed hereto (for
the U.S. opinion) and, with respect to the Polish and German opinions,
in such other form as may be reasonably acceptable to Purchaser and its
counsel.
6.06 Resolutions
Seller and Accom Virtual Studio Inc., a Delaware corporation, shall
deliver to the Purchaser true and correct copies of resolutions of
their respective boards of directors approving this Agreement, the
exhibits and schedules and the transactions contemplated hereby and
thereby, substantially in the form attached hereto as Exhibit G annexed
hereto.
6.07 Documents
The xxxx of sale, deeds, instruments of assignment and all other
documents to be delivered by Seller to Purchaser at the Closing shall
be in form and substance reasonably satisfactory to Purchaser.
As regards the purchase of shares of Accom Poland, Purchaser and Accom
Virtual Studio shall enter, on the Closing Date, into the conditional
share sale agreement as described in Section 1.01. above.
6.08 Consents
Except for the approval of the Polish Office for Protection of
Competition and Consumers necessary for the acquisition of the shares
of Accom Poland, Purchaser shall have received copies of all consents,
approvals, authorizations and orders referred to in Section 4.01 hereof
and listed in Section 2.26 of the Disclosure Schedule, all of which
shall be in form and substance reasonably satisfactory to Purchaser and
shall continue to be in full force and effect.
6.09 No Liabilities
As of the Closing Date, Seller shall have paid, or made provisions for
paying, and shall have caused Accom Virtual Studio or Accom Poland to
pay or to have made provisions for paying all outstanding liabilities
of Accom Poland and/or related to shares of Accom Poland and/or
relating to the Elset Business Assets in respect of all trade debts,
other debts, liabilities to employees, Taxes and so forth such that all
Elset Business Assets and/or the shares of Accom Poland are transferred
to Purchaser hereunder free and clear of any liabilities whatsoever.
6.10 No Injunction
There shall not be in effect on the Closing Date any judgment, order,
injunction or decree of any court enjoining consummation of the
transactions contemplated by this Agreement.
6.11 No Government Proceeding or Litigation
There shall not be threatened, instituted or pending any suit, action,
investigation, inquiry or other proceeding by or before any
governmental or other regulatory administrative agency or commission
(other than the issue relating to the Polish taxes disclosed to
Purchaser) which in the reasonable judgment of Purchaser may have a
material adverse effect on the financial condition, results of
operation or prospects of the Elset Activity and/or the activity of
Accom Poland and/or the Elset Business Assets being purchased by
Purchaser pursuant hereto.
6.12 [Intentionally Reserved]
6.13 [Intentionally Reserved]
6.14 Transfer of Employees
Any and all current employees, involved in the research and
development, marketing, sales and support projects of the Elset
Activity, and all work related thereto (other
than those employees referenced in Section 6.15 herein), shall have
agreed to become employees of Purchaser.
6.15 Agreement with Employees
Purchaser shall have entered into Employment Agreements with a certain
US employee listed in Section 4.06 of the Disclosure Schedules, along
the same terms and conditions as their present agreements. The
Employment Agreements shall be effective as of the Closing Date.
6.16 Transfer of Seller's Customer Agreements
Seller shall cause, complete and effect the notification and, if
required, Assignment of the agreements between the Seller and its
customers (those agreements with such customers as are set forth in
Section 2.19 of the Disclosure Schedule) under the same terms and
conditions as were in effect prior to such notification or Assignment.
6.17 [Intentionally Reserved]
6.18 Board Approval
Purchaser's Board of Directors shall have approved and authorized the
consummation of the purchase of the Elset Business Assets and the
shares of Accom Poland by Purchaser and the other transactions
contemplated hereunder.
6.19 Further Action
Except for the approval of the Polish Office for Protection of
Competition and Consumers necessary for the acquisition of the shares
of Accom Poland, all consents, approvals, authorization, exemptions and
waivers from third parties that shall be required in order to enable
Purchaser to consummate the transactions contemplated hereby and
thereby shall have been duly obtained (except for such actions,
consents, approvals, authorizations, exemptions and waivers, the
absence of which would not prohibit consummation of such transactions
or render such consummation illegal).
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to sell the Elset Business Assets as well as
the obligations of Accom Virtual Studio to enter into the conditional
agreement for the purchase of shares of Accom Poland shall be subject
to the satisfaction on or prior to the Closing Date of all of the
following conditions:
7.01 Representations, Warranties and Covenants of Purchaser
Each of Purchaser and Orad shall have complied in all material respects
with all of its agreements and covenants contained herein to be
performed at or prior to the Closing Date, and all of the
representations and warranties of Purchaser and Orad contained herein
shall be true in all material respects on and as of the Closing Date
with the same effect as though made on and as of the Closing Date,
except as otherwise contemplated hereby, and except to the extent that
such representations and warranties were made as of the specified date,
and except to the extent that any failure of such representations and
warranties to be true as aforesaid when taken in the aggregate would
not materially and adversely affect the business or financial condition
of Purchaser and Orad.
7.02 No Prohibition
No statute, rule or regulation or order of any court or administrative
agency shall be in effect which restrains or prohibits Seller, Accom
Virtual Studio, Accom Poland, Accom Virtual Studio (Germany) GmbH, or
Elset Electronic-Set GmbH, from consummating the transactions
contemplated hereby.
7.03 Performance
Each of Purchaser and Orad shall have performed and complied, in all
material respects, with all agreements, covenants, obligations and
conditions required by this Agreement to so be performed or complied
with by it prior to or at the Closing.
7.04 No Injunction
There shall not be in effect on the Closing Date any judgment, order,
injunction or decree of any court enjoining consummation of the
transactions contemplated by this Agreement.
7.05 Board Approval
Seller's Board of Directors shall have approved and authorized the
consummation of the sale of the Elset Business Assets to Purchaser by
Seller and the other transactions contemplated hereunder. Accom Virtual
Studio's Board of Directors shall have approved and authorized the sale
of shares of Accom Poland to Purchaser.
7.06 Further Action
Except for the approval of the Polish Competition and Consumer
Protection Office necessary for the acquisition of the shares of Accom
Poland, all consents, approvals, authorizations, exemptions and waivers
from third parties that shall be required in order to enable Purchaser
to consummate the transactions contemplated hereby shall have been duly
obtained (except for such actions, consents, approvals, authorizations,
exemptions and waivers, the absence of which would not prohibit
consummation of such transactions or render such consummation illegal).
ARTICLE VII-A
CONDITIONS SUBSEQUENT TO PURCHASER'S OBLIGATIONS
Purchaser's obligations to purchase the Elset Business Assets and shares of
Accom Poland and to perform its obligations under this Agreement shall be
subject to the satisfaction of the following condition:
7A.01 Release of all Encumbrances on the Elset Business Assets
Immediately after the Closing, but in no event more than seven (7) days
thereafter, Seller shall take all necessary steps to remove or release
any Liens (including those registered under California's U.C.C.) on the
Elset Business Assets and to provide documentation satisfactory to
Purchaser or Orad that all such Liens have been released.
7A.02 Anti-Monopoly Approval in Poland
(a) The transfer of shares of Accom Poland from Accom Virtual
Studio to Purchaser, under the conditional agreement for the
purchase of shares described in section 1.01 hereof, shall be
conditional and will be effective upon fulfillment of one of
the following conditions:
(i) issuance to both the Purchaser and Accom Poland of the
letters from the President of the Office for Competition and
Consumer Protection informing each of them that the
Purchaser's purchase of the share in Accom Poland does not
require pre-merger notification;
(ii) issuance to both the Purchaser and Accom Poland,
whichever occurs later, of the no-reservation letters with
respect to the transaction of sale of Accom's Poland share to
Buyer; or
(iii) non-issuance to any of the Purchaser or Accom Poland of
the no-reservation letters with respect to the transaction of
the sale of Accom Poland's share to the Purchaser, within
sixty-five (65) days from the date of both the Purchaser and
Accom Poland filing the complete applications, subject to the
provision of Article 11a.6 of the Law of February 24, 1990 on
Counteracting the Monopolistic Practices and Consumer
Protection (Dz.U. Nr 14, poz. 88, as amended).
(b) The transfer will occur automatically on the next working day
falling after (i) the date of receiving the latter letter as
referred to in sub-Section (i) above; (ii) the date of
receiving the latter no-reservation letter as referred to in
sub-Section (ii) above; or (iii) the date on which the latter
term which has begun as referred to in sub-Section (iii) has
elapsed, whichever occurs earlier.
(c) In the event that the President of the Office for Competition
and Consumer Protection issues to either the Purchaser or
Seller a reservation letter with
respect to the transaction as contemplated, this Agreement
will have no legal effect and the Purchaser and Seller shall
mutually agree upon actions to be taken with respect to the
transactions contemplated hereby, including without
limitation, considering a transaction regarding the sale of
all the assets of Accom Poland to Purchaser.
In the event that the condition subsequent to Purchaser's obligations
mentioned in Sections 7A.01 and 7A.02. are not satisfied, then this
Agreement, and all the transactions contemplated herein, as well as the
conditional agreement for the sale of shares in Accom Poland, shall
become null and void. In such an event, the following shall take place:
(i) Purchaser shall immediately return all Elset Business Assets to
Seller, (ii) Seller shall immediately return the Cash Payment, plus all
interest accrued thereon, to Purchaser; and (iii) the Escrow Agent
shall immediately return the Escrow Amount, plus all interest accrued
thereon, to Purchaser.
ARTICLE VIII
EMPLOYMENT AND EMPLOYEES BENEFITS ARRANGEMENTS
8.01 Definitions
(a) The term "Employees" shall mean all current employees or
workers involved in the research and development of
Elset-related technology (including all employees of Accom
Poland), as well as those employed by the Company and involved
exclusively in the marketing, sales and engineering support of
the Elset Business Assets.
(b) The term "Designated Employees" shall mean those individuals
listed in Section 4.06 of the Disclosure Schedule.
The Parties to this Agreement agree that, because of the purchase of
shares of Accom Poland by Purchaser from Accom Virtual Studio, and thus
indirect take-over of Accom Poland's employees by Purchaser, nothing in
this Agreement shall be interpreted and construed in a way that shall
or might cause the direct assumption by Purchaser (or direct transfer
by Accom Poland), of Accom Poland's employees to Purchaser.
8.02 Employment
(a) Termination
As of the Closing Date, Seller and its subsidiaries shall be
responsible for paying any liability with respect to severance,
commissions, paid leave, and any other benefits due to any employee
terminated on or before the Closing Date as a result of the sale and
purchase actions contemplated in this Agreement.
(b) Employees
As of the Closing Date, Orad shall extend to substantially all
Employees employment at comparable terms to those in effect immediately
prior to the Closing. Shortly thereafter, Orad intends to renegotiate
new employment terms with the Employees.
(c) Employee Share Option Plans of Seller and Orad.
Seller agrees that Employees entitled to purchase shares of Seller
under Seller's employee share option plan or other equity investment
plan, shall be entitled to exercise such rights within an extended
period that shall be no less than two (2) years from the Closing Date,
notwithstanding the provisions regarding termination of employment that
appear in Seller's plans or in such Employees' option agreements. Orad
agrees to grant to the Employees options under its Employee Share
Option Plan in the ranges set forth in Schedule 8.02, and shall do so
by extending and expanding the operating budget available for Accom
Poland by ten (10%) percent of the amount expended by Seller in its
1999 budget.
ARTICLE IX
TERMINATION PRIOR TO CLOSING
9.01 Termination
This agreement may be terminated at any time prior to the Closing:
(a) By the common written consent of Purchaser, Orad, Seller and
Accom Virtual Studio; or
(b) By either Seller or Purchaser in writing, without liability to
the party terminating this Agreement on account of such
termination (provided the terminating party is not otherwise
in default or in breach of this Agreement), if the other party
shall (i) fail to perform in any material respect its
agreements contained herein required to be performed prior to
the Closing Date, or (ii) materially breaches any of its
representations, warranties or covenants contained herein, and
the party terminating has provided to the other party written
notice of such failure to perform or breach and such intention
to terminate, and the other party has not cured such failure
or breach within 30 days of the date of such notice.
9.02 Effect on obligations
Termination of this Agreement pursuant to this Article shall terminate
all obligations of the parties hereunder provided, however, that
termination pursuant to clause (b) or of Section 9.01 shall not relieve
the defaulting or breaching party from any liability to the other party
hereto.
ARTICLE X
INDEMNIFICATION
10.01 Survival of Representations
Subject to Section 10.04 hereof, all representations, warranties and
agreements made by any party in this Agreement or pursuant hereto
(including, without limitation and for the avoidance of doubt, all
statements made herein, the Disclosure Schedule and any other document
delivered at Closing pursuant hereto) shall survive the Closing and any
investigation at any time made by or on behalf of any party.
10.02 [Intentionally Reserved]
10.03 Agreement to Indemnify
Subject to the terms and conditions of this Article X, including
without limitation Section 10.06, Seller hereby agrees to indemnify,
defend and hold harmless Purchaser and its parent corporations, and
each officer and director of Purchaser and its parent corporations, and
each affiliate thereof (collectively, the "Purchaser Group"), and their
successors and assigns, from and against all claims, actions or causes
of action, assessments, losses, damages, liabilities, costs and
expenses, including without limitation, interest, penalties and
attorneys' fees and expenses (collectively, "Damages"), asserted
against, resulting to, imposed upon or incurred by any member of the
Purchaser Group, directly or indirectly, by reason of or resulting from
a breach of any representation, warranty, or agreement of Seller
contained in this Agreement or any amendment thereto.
10.04 Limitation of Liability
(a) The obligations and liabilities of Seller with respect to
Claims under Section 10.3 hereof to the Purchaser Group shall
be subject to the following limitations:
Seller shall be obligated to indemnify the Purchaser Group
only for those Claims, other than those relating to any
liability for Taxes (especially those relating to Accom
Poland, and collectively referred to as "Tax Claims") or any
liability for 1999 Balance sheet shortfalls in excess of the
Escrow Amount, as provided in Section 2.05 hereof, as to which
the Purchaser Group has given Seller written notice thereof on
or prior to the twelve (12) month anniversary of the Closing
Date (whether or not such Claims have then actually been
sustained).
(b) With respect to any Tax Claims, Seller shall be obligated to
indemnify the Purchaser Group for all Tax Claims of any sort
with respect to Accom Poland, the Elset Business Assets,
Commitments, or any operations of the business of Seller that
relate to the period on or prior to the Closing Date, until
the
expiration of all applicable statutes of limitation with
respect to such Tax Claims.
10.05 Conditions of Indemnification
The obligations and liabilities of Seller to indemnify the Purchaser
Group under Section 10.03 hereof with respect to Claims resulting from
the assertion of liability by third parties shall be subject to the
following terms and conditions:
(a) Any member of the Purchaser Group against whom any such Claim
is asserted will give Seller prompt written notice of any such
Claim, and Seller or its subsidiary will undertake the defense
thereof by representatives of their own choosing. If Seller,
within twenty days after written notice of any such Claim,
fails to defend such Claim, the member of the Purchaser Group
against whom such Claim has been made will (upon further
notice to Seller) have the right to reasonably undertake the
defense, compromise or settlement of such Claim on behalf of
and for the account and risk of Seller, subject to the
Purchaser notifying the Seller prior to the settlement or
compromise thereof.
(b) Anything in this Section 10.05 to the contrary notwithstanding:
(i) The member of the Purchaser Group against whom a
Claim has been made shall have the right, at its sole
expense, at any time to select and retain
representatives to act as co-counsel in the defense
of any Claim being defended by representatives of
Seller. Seller agrees to cause its representatives to
consult in good faith with any such Purchaser Group
representatives with respect to decisions involving
the conduct and defense of any such Claim, provided
that, subject to clauses (ii) and (iii) of this
Section 10.05 (b), the representatives of Seller
shall retain final discretion and authority with
respect to the conduct and defense of such Claim.
(ii) If there is a reasonable possibility that a Claim may
adversely affect the member of the Purchaser Group
against whom such Claim has been made other than as a
result of monetary damages or other monetary payments
(i.e., the Purchaser Group may be collaterally
stopped from asserting any legal claims or defenses
or may be prejudiced as to any future claims), such
member of the Purchaser Group shall have the right,
at its own cost and expense, to defend, compromise or
settle such Claim; provided that in such event such
member of the Purchaser Group shall not have any
right of subrogation or contribution against the
Seller.
Seller shall not, without the written consent of such
member of the Purchaser Group, settle or compromise
any Claim or consent to the entry of any judgment
which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff
to such member of the Purchaser Group a release from
all liability in respect of such Claim.
(c) With respect to all other future claims of whatever nature
alleged or filed against Purchaser with respect to the Elset
Business Assets and/or Accom Poland, Seller shall, upon the
reasonable request of Purchaser, reasonably assist (without
any unreasonable or excessive expense of Seller) Purchaser in
the preparation of and for any such litigation or threatened
litigation.
10.06 Remedies Cumulative; Limitation on Recourse
Except as otherwise provided herein, the remedies provided herein shall
be cumulative and shall not preclude the assertion by any party hereto
of any other rights or the seeking of any other remedies against the
other party hereto; provided, however, that other than for Taxes, the
Purchaser's recourse against the Seller shall be limited to the Escrow
Amount, except in such case in which the Purchaser shall incur monetary
or other damage claims arising out of or as a result of willful
misconduct or fraud on the part of the Seller or any of its executive
officers and directors.
ARTICLE XI
MISCELLANEOUS
11.01 Allocation of Purchase Price Among the Elset Business Assets
The Purchase Price shall be allocated among the Elset Business Assets
and the shares of Accom Poland Sp. z o.o. in accordance with the table
below. Seller and Purchaser shall report the sale and purchase of the
Elset Business Assets and the shares of Accom Poland Sp. z o.o. for any
relevant purpose in a manner consistent with such allocation.
---------------------------------------- ---------------------------------------
ITEM PRICE ALLOCATION
---------------------------------------- ---------------------------------------
Fixed Assets (priced at FMV) and US $500,000
all other Property of whatever nature
transferred pursuant to this Agreement
(other than as set forth below)
---------------------------------------- ---------------------------------------
Intellectual Property US $1,000,000
---------------------------------------- ---------------------------------------
Shares of Accom Poland US $2,500,000 in cash, and warrant
valued at $1,000,000
---------------------------------------- ---------------------------------------
TOTAL: US $4,110,000
---------------------------------------- ---------------------------------------
11.02 Entire Agreement
This Agreement (including the Disclosure Schedule and all Exhibits
hereto) constitutes the sole understanding of the parties with respect
to the subject matter hereof. Matters disclosed by Seller to Purchaser
pursuant to any Section of this Agreement shall be deemed to be
disclosed with respect to all Sections of this Agreement. No amendment,
modification or alteration of the terms or provisions of
this Agreement shall be binding unless the same shall be in writing and
duly executed by the parties hereto.
Should the obligations of the Seller, or its subsidiaries, under this
Agreement, be contrary to any of the provisions of the conditional
share sale agreement, to be concluded on Closing Date by Accom Virtual
Studio and Purchaser, then the obligations contained in the conditional
share sale agreement shall be deemed as the sole obligations of Accom
Virtual Studio and Purchaser.
11.03 Successors and Assigns
The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors of the parties hereto;
provided, however, that this Agreement may not be assigned by any party
without the prior written consent of the other party hereto, except
that Purchaser may, at its election, assign this Agreement to any
direct or indirect wholly-owned subsidiary of itself or of any ultimate
parent corporation. If this Agreement is assigned with such consent or
pursuant to such exception, the terms and conditions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective assigns; provided, however, that no assignment of this
Agreement or any of the rights of obligations hereof shall relieve any
party of its obligations under this Agreement.
11.04 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, other than its conflict of law
rules, and other than Polish law as may be required with respect to the
actions contemplated hereunder with respect to Accom Poland.
11.05 Arbitration
The parties shall endeavor to resolve any disputes that may arise
hereunder by themselves. Within fifteen (15) days after notice of any
dispute is given by a party, an executive officer of each of the
parties will meet and make a good faith attempt to resolve such
dispute. If, notwithstanding such efforts and meetings, the Purchaser
and Seller are not successful in resolving such dispute, then they
shall submit any dispute arising under this Agreement, for a monetary
claim exceeding US $100,000, to binding arbitration by a panel of three
arbitrators under the rules and auspices of the American Arbitration
Association (the "AAA"). Such arbitration, if necessary, shall apply
New York law and shall take place in New York, or at such other venue
agreed to in writing by the parties.
11.06 [Intentionally Reserved]
11.07 Counterparts
This Agreement may be executed in one or more facsimile counterparts,
each of which shall for all purposes be deemed to be an original and
all of which shall constitute the same instrument.
11.08 Headings
The headings of the Sections and paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute
part of this Agreement or to affect the construction hereof.
11.09 Modification and Waiver
Any of the terms or conditions of this Agreement may be waived in
writing at any time by the party which is entitled to the benefits
thereof. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof
(whether or not similar).
11.10 Broker's Fees
Each of the parties hereto (i) represents and warrants that it has not
taken and will not take any action that would cause the other party
hereto to have any obligation or liability to any person for a finder's
or broker's fee, and (ii) agrees to indemnify the other party hereto
for breach of the foregoing representation and warranty, whether or not
the Closing occurs.
11.11 Expenses
Seller and Purchaser shall each pay all of their respective costs,
expenses and taxes (including sales taxes) incurred by it or on its
behalf in connection with this Agreement and the transactions
contemplated hereby, including, without limiting the generality of the
foregoing, fees and expenses of its own financial consultants,
accountants and counsel.
Stamp duty for the purchase of shares of Accom Poland shall be paid by
Purchaser and Accom Virtual Studio in equal parts.
IN WITNESS WHEREOF, this Agreement has been duly executed on the date herein
above set forth.
------------------------------------- ------------------------------------------
ACCOM, INC. ORAD HI-TEC SYSTEMS LTD.
By: /s/ Xxxxxx Xxxxxx By: /s/ Avi Sharir /s/ Xxxx Xxxxx
----------------------------- -------------------------------------
Name: Xxxxxx Xxxxxx Name: Avi Sharir Xxxx Xxxxx
----------------------- ---------------------------------
Title: President & CEO Title: President & CEO Exec. VP
---------------------- ----------------------------------
------------------------------------- ------------------------------------------
ACCOM VIRTUAL STUDIO (Germany) GmbH IMadGINE VIDEO SYSTEMS MARKETING B.V.
By: /s/ Xxxxxx Xxxxxx By: /s/ Avi Sharir /s/ Xxxx Xxxxx
----------------------------- -------------------------------------
Name: Xxxxxx Xxxxxx Name: Avi Sharir Xxxx Xxxxx
----------------------- ---------------------------------
Title: Managing Director Title: Director Director
------------------------ ----------------------------------
----------------------------------
ELSET ELECTRONIC-SET GmbH
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Managing Director
As to Section 4.09 only:
/s/ Xxxxxx Xxxxxx
---------------------------------
XX. XXXXXX XXXXXX
------------------------------------- ------------------------------------------
ACCOM VIRTUAL STUDIO, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------
Name: Xxxxxx Xxxxxx
---------------------
Title: President & CEO
--------------------
As to Section 4.09 only:
/s/ Xxxxxx Xxxxx
--------------------------
XX. XXXXXX XXXXX
------------------------------------- ------------------------------------------
LIST OF EXHIBITS
Exhibit A - Form of Conditional Contract for Sale of Share
Exhibit B - Form of Irrevocable Power of Attorney
Exhibit C - Form of Warrant
Exhibit D - Form of Escrow Agreement
Exhibit E - Non-Disclosure and No-Hire Agreement
Exhibit F - Form of Opinions of Counsel of Seller and Seller's German and Polish
Subsidiaries
Exhibit G - Form of Resolutions of Seller's and Accom Virtual Studio's Board of
Directors
DISCLOSURE SCHEDULES
--------------------
SECTION
1.01 Elset Business Assets and Properties
1.08 Assumed Liabilities
2.04 No Violation
2.06 Other Liabilities
2.07 Certain Changes
2.09 Liens
2.11 Equipment and Fixed Assets
2.12 Leases
2.13 Proprietary Rights; Computer Programs, Databases
2.14 Litigation
2.15 Insurance
2.16 Employee Benefit Plans
2.17 Bank and Safe Deposit Boxes
2.18 Contracts and Commitments
2.19 Customers and Suppliers
2.20 Personnel
2.21 Labor Relations
2.22 Environmental Protection
2.23 No Breach
2.24 Compliance
2.25 Assets Necessary to Business
2.26 Consents
2.28 Accounts Receivable
4.02 Conduct of Business
4.06 Agreement with Employees
